Wage increase slows

The annual rate of wage increase has been substantially dropping for a second consecutive month. In the second quarter, the average full-time wage was only 3.3% higher year-on-year. It is twice slower than in 2014 and 2015. We expect that in the next quarters the annual rise in wages will be under 5%.

Within the past two-and-a-half years, the rise in wages in the private sector was faster than in the public sector. This situation is likely to change in the future. Those working in the private sector can scarcely expect pleasant wage surprises: the rate of growth of the economy has substantially slowed in the first half of the year, and usually the economic developments are reflected in wages with some delay.

In the public sector, wage y-o-y could accelerate. On 1 September, the new wage model for educators will be implemented, substantially raising a teacher's wage per workload. Reforms in healthcare will also be reflected in a rise in wages. The government also conceptually resolved to raise the wages of court employees and policemen in 2017.

Wages in the public sector should not rise for everyone, but that they should promote quality of work, thereby increasing public satisfaction with healthcare services as well as with education and legal systems. For instance, for pupils' performance it would be better to substantially increase wages of outstanding educators, not to marginally increase wages for all teachers by the same amount.